As Data Centers Continue Spreading Across Virginia, State Lawmakers Propose New Development Rules

Dozens of bills have been introduced by members of both parties

by Charlie Paullin

As data centers continue to proliferate across Virginia, the General Assembly this winter is poised to take up a host of bills intended to address their impacts, including increased electricity costs and 
environmental pressures. 

Virginia is home to the greatest concentration of data centers in the world. While the centers can be found around the state, most are in Northern Virginia, which has more than 300. Eastern Loudoun County, where the facilities cover roughly 573 acres, is known as Data Center Alley. Prince William is increasingly becoming a hot spot after local officials recently approved a campus of as many as nine centers that would sit on 270 acres, and as many as 37 centers on 2,000 acres.

“They came to Northern Virginia because of the workforce, because of the existing infrastructure and proximity to the federal government,” said state Sen. Danica Roem, D-Manassas.

The industry, which receives millions of dollars in tax breaks, says data centers are a modern necessity that also provide an economic boost to the state.

“The data center industry has invested more than $37 billion in the commonwealth over the past two years and Virginia continues to distinguish itself as one of the most dynamic and important locations in the world for the digital infrastructure that enables our innovation economy and meets the growing, collective computing demands of individuals and organizations of all sizes,” said Josh Levi, president of the Data Center Coalition.

But environmental and some local groups say the rapid proliferation of the facilities requires officials to institute ratepayer and environmental protections. 

“Virginia has an opportunity to lead here,” said Paige Wesselink, digital outreach coordinator with the Virginia chapter of the Sierra Club.

This December, Virginia’s Joint Legislative Audit and Review Commission, which conducts research on behalf of the General Assembly, passed a resolution to study the overall impacts of the industry 
in Virginia.

In the meantime, both Democrats and Republicans have introduced about a dozen bills addressing data center growth, ranging from evaluating the costs of electric grid upgrades; requiring buffers around facilities and site assessments of land, air and water impacts; and linking clean energy sourcing requirements to tax 
credit eligibility. 

Any bills that pass the General Assembly will also have to gain the support of Gov. Glenn Youngkin, who has supported a $35 billion investment by Amazon Web Services in data center campuses across Virginia.

Youngkin spokesman Christian Martinez said the governor will review any legislation sent to his desk.

Del. Ian Lovejoy, R-Prince William, said he believes there is room for bipartisan agreement on many of this 
session’s proposals.

“There has to be for Prince William County to get anything done,” said Lovejoy. “Hopefully the houses can work on something that the governor will find acceptable.”

Ratepayer protections 

Several bills this session aim to address concerns about data centers’ large electricity demand, which can require the construction of new generation sources and grid upgrades.

According to the federal government, data centers need 10 to 50 times the energy per floor space of a typical commercial office building. In Virginia, Dominion Energy has cited expected increases in data centers as a primary driver of its request to build a new natural gas plant in Chesterfield. Additionally, higher-voltage transmission lines are often needed to deliver the power data centers need, at a cost of tens of millions of dollars.

One bill from Sen. Suhas Subramanyam, D-Loudoun, would require utility regulators at the State Corporation Commission to “ensure” that any request from a utility to meet demand linked to data centers be met at the “lowest aggregate reasonable cost.” 

It would also require the SCC to evaluate current rate structures to see if transmission project costs linked to data centers are being fairly applied or are being spread too widely among the 
broader customer base. 

“One of the benefits of data centers is how much money it brings to a locality,” Subramanyam said. “And we like that, but I also want to make sure that the infrastructure needed to power those data centers, that those costs are reasonable to ratepayers and are not essentially defeating that purpose of the data centers, which is to be an economic boon for 
a locality.”

The idea is to begin the conversation on who should pay for the upgrades, said Dan Holmes, legislative director for Clean Virginia, a clean energy advocacy group started by millionaire Michael Bills to counter Dominion’s influence in the General Assembly. Some transmission upgrade projects may improve service for the greater community, he noted, meaning it might make sense for costs to be spread out among 
more customers. 

“We need the SCC to affirmatively answer some of these questions,” said Holmes.

Another bill from Subramanyam and Del. Rip Sullivan, D-Fairfax County, would require data centers to meet certain standards, including getting 90% of their energy from non-carbon-emitting sources and demonstrating certain levels of energy efficiency, in order to be eligible for the state’s data center retail sales and use 
tax exemption. 

“I just want my kids and grandkids to live in a community where the data centers aren’t harming them in any sort of way, and that they’re not getting in the way of us addressing bigger problems like climate change,” 
Subramanyam said.

Environmental protections 

In addition to the strain on the grid, concerns over potential environmental harms have led to a handful of 
legislative proposals.

One of Roem’s bills would require data centers sited within one mile of a national or state park to minimize their stormwater runoff. In Prince William County, a conservation group recently found data centers increase such runoff. 

Three other bills — from Roem, Del. Joshua Thomas, D-Prince William, and Lovejoy — would require various land buffers between data centers and parks and residences.

“The building of data centers is very close to residential neighborhoods, communities that were originally sites of land that were originally slated for residential being rezoned as light industrial,” said Lovejoy. “We wanted to make sure that that wasn’t being ignored.”

Still other measures focus on water usage. According to Venkatesh Uddameri, a professor and director of the Water Resources Center at Texas Tech University, a typical data center requires 3 to 5 million gallons of water a day in order to keep its machines cool enough to operate.

Data centers are able to recycle water, but only to a certain point. A presentation by Caroline County Public Utilities about one data center proposal found the facilities can only recycle 25% of the water they use because the rest evaporates. 

Bills from Thomas and Roem would require localities to conduct site assessments to examine the effect of a data center on water usage and carbon emissions. A different bill from Sen. Richard Stuart, R-King George, would ask the state Department of Environmental Quality to study the impact of data centers on groundwater supply, while a proposal from Del. Michael Webert, R-Fauquier, would create different water and sewer rates for data centers than those charged to other customers. 

Calls for environmental protections also extend to the noise generated by data centers, which some adjacent residents have said sounds like constant lawn work. A separate bill from Roem would require that a noise analysis be done by a third party as part of the local approval process. The bill would apply to future development and also limit backup generators to only running between 9 a.m. and 5 p.m. Monday through Friday. 

“Some people live in situations where they sleep at different hours than anyone else,” Roem said. “So maybe somebody needs to be sleeping in the early evening or whenever, because they’re working the night shift, or just anything.” 

Altogether, the measures are intended to provide some protection for future development of the industry, said Kyle Hart, manager at the National Parks Conservation Association. 

“This is an industry that is fully capable of meeting these expectations,” said Hart. “This is [a] long-term vision for 
this industry.”

Charles Paullin covers energy and environment for the Mercury. He previously worked for Northern Virginia Daily in the Northern Shenandoah Valley. This article originally appeared in the  Virginia Mercury.